Housing a Key Issue

Nothing is more revealing of a country's mentalities than its attitude towards housing. In France, property is sacred, and housing remains scarce, and expensive. Far more expensive than elsewhere in Europe.

So, the average rental price per square metre in Paris is €25, compared to less than €6 in Berlin; it is €12 per square metre in Bordeaux and Toulouse, compared to less than €8 in the major cities of the German provinces. Purchasing a house in Paris is in the region of €8,300/m², compared to less than €5,000 in Berlin; and the differences are of the same order between the other cities. Consequently, in Germany a monthly income of around €1,000 allows an employee to live in decent housing; not in France, where the annual cost for housing is on average €4,600 for those who are homeowners with no loans, €5,400 for tenants in low-cost housing, €7,500 for tenants renting in the free housing sector and €13,700 for those who borrowed to buy a home. As a result, today it is practically impossible for a young person who works in Paris to find decent housing there.

More generally, the more expensive the housing costs, to rent or to purchase, the higher the wages must be and the less competitive the economy becomes. The consequences of the value of a patrimoine on labor costs are also a major cause, too much overlooked, of the loss of competitiveness of France.

The prerequisite to any economic recovery should therefore be based upon the reduction in the cost of housing. As a first step we must ensure that we understand its major significant cause: the lack of available land for home-building; because economic activities are concentrated among too few cities, and in particular in Paris; because public subsidized housing focuses too much on demand, and not enough on supply; and finally, because demand is increasing with population growth: France has gained 10 million persons since 2000 when the German population started to decline.

The bill on "Access to housing and urban renovation » ["Accès au Logement et un Urbanisme Rénové" - ALUR] going through parliament, inspired by the best intentions, will actually exacerbate the situation, making it even more difficult to construct new housing. This Bill provides for a universal rent guarantee (jointly financed by tenants and landlords via a contribution on rent), the reform of social housing allocations, the public rental controls, the handing over to inter-communal bodies of urban-planning powers and construction permits as well as the supervision of real estate professionals. With such a bill the whole sector of rental construction will be damaged and no new space of construction will be created.

There, as elsewhere, it calls for daring to do what everyone knows is necessary and that nobody dares suggest: stimulate in a sustainable way the increase in the provision of housing, and in order to do this to put the power back on resource tenure in the hands of the State, the only one capable of creating building land without conflict of interest. For example, in Paris, it would be sufficient to liberate to a significant extent building lands, to change the Malthusian and absurd rule which limits today the height of buildings to 20 metres. This would amount to reducing significantly housing prices and revitalizing the city, whilst, of course, still protecting the most emblematic districts, and by selecting the best available architects. Those who are homeowners there, the place being their dwelling-house, would lose nothing in this since a house has only a value of barter exchange. Only those who built in order to rent would have something to lose in this, and the mayors who could look with suspicion the coming of new voters. This could be done in every city. But how could we think that a parliament entirely in the hands of local elected officials would be able to take this decision?

One might even think, even if it is a more distant dream, about a much bigger reform, and which would have a huge impact on French competitiveness: progressively outsource a large part of the central and regional administrations all along the Seine Valley, as far as Le Havre. This would liberate the Paris region from a land hold increasingly heavy and would push commercial property housing prices lower. Paris could then think of itself as the economic and cultural capital of Europe, all the way to the sea.

It would be much more useful than a new technocratic law with pervasive effects that are certain. However, all the rentiers may be reassured: no matter who is governing, none of this will take place.